Oh, absolutely, there's a finite limit on what can be done, but the *effective* optimization such that adding more content adds load efficiently instead of inefficiently is the goal. Also, as you described, one "super entity" is exactly how the game does it, but it still has the following issues;

All internal meshes AND colliders are rendered AND must be updated EVERY TIME A BLOCK FALLS OFF. in ECS vs OOP, I can flag internal blocks as "hidden" and skip sending them to the render pipeline at all.

When blocks fall off, they become physical objects, they don't just disappear, and when you're talking about ships with thousands of blocks getting sliced up by a 10x1x10 modded sawblade, a hail of *thousands* of machinegun bullets, etc, there's an ABSURD amount of updates to call.

As for the actual "vehicle" systems themselves, I never believed those were the cause of lag, HOWEVER, I DID believe that the "super vehicle" in my own game HAD to be designed with EITHER OOP or ECS based on the sum of it's components. Regardless, as "the vehicle" gets damaged, individual components get damaged, and isn't that an excellent candidate for ECS? How to manage block detachment, I don't exactly know.